Counties are the cornerstones of our economic sustainability
The Subnational Doing Business Report that was released this week made one thing clear, that every country, no matter the rankings on the indicators, has good practices that can be adopted by other counties to help improve our country’s overall competitiveness. Although the study covered only 10 counties, it demonstrated that for each strength a particular county boasted of, there were several constraints that denied them the full benefits of both local and foreign investments. If we take Nairobi, for instance, it took the best position on the registration of property indicator but did poorly on dealing with construction permits. Yet Kisumu which came out on top in the latter ranked number 7 in starting a business. Uasin Gishu on the other hand was the best in starting a business and had the highest Distance to Frontier score.
There is no question that counties are the future cornerstones of our economic sustainability. But how quickly we act to turn their potential into a tangible transformation for our country is entirely upon us and the structures that we commit to instituting now. 3 years into the devolved system of government however, we are still trying to figure out how to leverage our diversity or rather how to turn our differences into a positive boost for growth.
Beyond the excitement of the new constitution, settling down into a devolved style of government has proved difficult for businesses around the country. We have not been able to ween off our dependence on the national government long enough to realize that each county has to now look for fresh and innovative ways to be the choice destination for investors. Many of the regulatory frameworks have become a complicated web of ever-changing rules that a lot of businesses have to grapple with. This has had a negative impact on their operations and consequently on their decisions to invest or not invest in these regions.
But we all know that regulatory frameworks in and of themselves are not the issue, the issue is how they are structured or in this case, unstructured. It is, however, possible to use regulations to attract investment and spur growth especially of small firms within the county. And this is where the business community especially through their associations, come in. The role of business associations to economies all over the world is seen as that which supports the state or states to perform their functions efficiently and to provide their expertise to help markets grow, diversify and continually aim for global standards.
In Colombia, the Coffee Association, is a good case in point of how the business community steps in to assist the state to get rid of some of the impediments to effective business operations. The Coffee Association was allowed by the Colombian government to collect export tax which would go to facilitate their local producers’ operations e.g. offering support in transport infrastructure and using port facilities. In doing so, the Association improved the country’s overall capacity to export and earned the government increased revenue to continue to run public institutions effectively.
In Kenya, business associations have taken some steps into easing the burden of double taxation and multiple levies and charges brought about by the new governing structure. Some have opened up offices in all 47 counties so that they can be closer to their members and are therefore able to articulate the challenges and opportunities better.
In our case, KAM has partnered with the Commission for Revenue Allocation to come up with a policy document to guide the drafting of county revenue laws, and actually drafted the existing laws for counties based on the constitution. This is meant to address the problems mentioned above which have seen businesses face hardships and losses whilst operating under unclear and unpredictable regulations in different counties. The policy document has identified standards that should be adhered to in the formation of county revenue legislation in order to encourage the growth and productivity of county based firms and attract local and foreign investments
I should add that the business community continues to be instrumental in driving public participation and involvement in such civic duties as contribution to the county budget and economic forum. These are not only critical in shaping business growth in counties but also have a long-term socio-economic impact for the communities.
The business community recognizes the counties, despite the current challenges present great opportunities to grow local businesses. Each county needs to identify its strength and hone its skills and human capital in order to optimize its reach resources. Be it is people, cultural artefacts, landscape, vegetation, every county has something to offer that can be used to showcase best practice and the knowledge transferred to other counties. This is the only way to achieve our economic ambitions and drive industrialization.
The writer is the CEO of the Kenya Association of Manufacturers and the UN Global Compact Representative for Kenya. She can be reached on [email protected].